Both institutional and private investors can give priority to diversification, acquiring direct real estate on markets they know well, and operating (other) private and listed real estate vehicles in order to acquire greater exposure to those real estate markets with which they may be less familiar. Indeed, we deliberately embrace investments in REITs (or funds investing in REITs), as they provide access to the more international property markets. It is clear that listed real estate companies invest in real estate, but at the same time they operate in a market parallel to the physical real estate market, in other words the stock exchange.
Thus, property stocks can have different risks (volatility) and yield characteristics, especially in times of high inflation. Therefore, investors' attention at present needs to be focused on future dividend yields. We believe that, in the near future, investors will 'demand' a higher real total return (before leverage) to offset increased property risk. Stable or higher cap rates moderate the total return, reducing the increase in value. We assume that the total return (before financing) for most property markets will not exceed 10% this year.
